AT&T Inc. will buy $1.92 billion worth of broadcast spectrum from Qualcomm Inc. to ramp up its high-speed, next-generation "4G" network, the companies said on Monday.
Qualcomm, based in San Diego, has used the spectrum for its FLO TV service, which allows subscribers to watch 10 to 15 channels on live television on cell phones. Qualcomm will shut down the service in March because of weak interest from consumers and a limited number of phones that can even run FLO TV programming. In the latest quarter, running FLO TV cost the company $132 million.
The spectrum Dallas-based AT&T is buying covers 70 million people in New York, Boston, Philadelphia, Los Angeles and San Francisco, along with 230 million people in the rest of the country. The purchase will allow AT&T to bolster its forthcoming "4G" network, whose higher speeds will make loading video and websites on phones faster.
Competing cell phone companies, such as Sprint Nextel Corp., T-Mobile USA Inc. and Verizon Communications Inc. have already begun rolling out their next-generation networks, putting pressure on AT&T to catch up.
FLO TV, meanwhile, has been a blemish on Qualcomm's otherwise strong record recently. In the fourth quarter, its profit rose 8 percent to $865 million on strong sales of its smart phone chips, beating Wall Street expectations. The company said that it is benefiting from the spread of "3G" wireless networks. Its Snapdragon chip can be found in a growing number of high-end smartphones that promise faster-than-average operating speeds.
The company has also said it expects to take a bite out of the tablet computer market as consumer electronics makers scramble to develop products that can compete with Apple Inc.'s popular iPad.
Shares of AT&T Inc. rose 90 cents, or 3.5 percent, to $26.97 in premarket trading, while Qualcomm shares rose 62 cents to $50.08.
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